28 SEPTEMBER 1999
Master of Ceremonies
The Chairman and Board of Kgorong Investments Holdings
Distinguished Guests
Ladies and Gentlemen
We have just returned from a trip to the United States of America in a delegation headed by our President, Thabo Mbeki. We interacted and engaged in dialogue with the business and investor community through the US - South Africa Business and Finance Forum. The confidence in our country remains positive and strong. The people we met, most of whom are long-standing friends of South Africa, continue to look at South Africa favourably, and are showing a deep commitment to contribute to making our country succee d. It is a commitment that the USA Administration and we do not take for granted. Through the Bi-National Commission (BNC), an instrument that captures and will continue to forge co-operative relations between the USA and South Africa, we will harness the economic and other opportunities between our two countries.
The visit of the President and his delegation to the USA also served to confirm the central strategic task still facing South Africa, Africa and the rest of the developing world. The challenge to overcome the poverty crisis remains our collective responsib ility as the developed and developing countries.
President Mbeki noted in an interview the significance of the remarks on the issue of poverty across the globe made by President Bill Clinton in his address to the United Nations General Assembly. This is an indication that the matter is now being given th e attention it really deserves.
It is also encouraging that within developed countries of the north; there is an emerging voice responsive to the call for the cancellation and/or revisit of the debt burden. As developing countries, we are saying that this matter should not be looked at a s handouts. Debt relief, approached correctly has the potential to unleash and redirect resources towards economic development and poverty eradication. In a way, we are saying that for our world to survive, it can no longer be business as usual. The povert y trap, in both developed and developing countries has reached unprecedented and dangerous levels. We can only ignore this reality at our own peril.
It is therefore critical that governments and the private sector work in partnership in devising concrete programmes aimed at addressing this challenge. Our visit to the USA was indeed a working visit aimed at taking these matters forward. The Foreign Mini sters of the Non-Aligned Movement (NAM), under the Chairmanship of Foreign Minister Zuma also met at this time to take forward the resolutions and programmes agreed upon at the NAM Summit held in Durban in 1998. The IMF meeting itself has sent out a very p ositive message to the developing countries. We cannot afford to miss this opportunity.
Our visit, meetings of the United Nations and IMF were taking place in the context of economic recovery in the world economy. The timing of our visit in placing some of the above matters on the agenda during this time was itself of critical importance.
My personal assessment is that we are indeed succeeding in our objectives. We participated and engaged in discussions on these important matters as equals. The key challenge remains the implementation of the decisions and agreements reached at the various forums.
I am raising these matters because they will impact on our very approach to Black Economic Empowerment (BEE). The state of the world economy and domestic developments have the potential to strengthen and/or undermine the process of Black Economic Empowerme nt. Opportunities for Black Economic Empowerment are created as a result of decisions made at forums such as those referred to above. Of course, this will be acknowledged in a view that believes such opportunities are not only created by government through its procurement of goods and services.
The future of Black Economic Empowerment should be approached with an open mind. It has however never arisen for us as government to put in question Black Economic Empowerment. We will need to look at our experience over the past 5 years and assess to what extent its objectives were realised. This is a matter we will need to engage in collectively. We hope the Commission set up for this purpose under the chairmanship of Comrade Cyril Ramaphosa will contribute immensely to this on-going debate.
Our starting point as government, based on the experience of the past 5 years is that the concept should not be abused. Many deals and transactions were entered into in the name of Black Economic Empowerment, and we should admit however that some of these have not fully realised the goals of BEE. Whilst this is not the ideal situation, it provides us with an opportunity to review and learn from these experiences. This will assist in putting BEE on a better footing.
It must be said that the accusations by our opponents and cynics should serve as an opportunity to look at ourselves, and whether or not we are doing things right. I believe that the Ramaphosa Commission on the future of BEE is in itself an acknowledgement of its current weaknesses. Black Economic Empowerment in this country is still new. We should therefore not enter into a panic mode and make hasty/wrong decisions. In a way, we are all experimenting with this new concept, and our collective experiences sh ould assist us in giving meaning and content to our perspective of Black Economic Empowerment.
Ladies and gentlemen, Black Economic Empowerment is indeed connected to political stability and economic efficiency. Black Economic Empowerment remains a key aspect of the transition towards a non-racial, non-sexist and democratic society. It is a necessit y that we both deracialise and transform the economy and other institutions of our society. We all accept that genuine freedom and reconciliation could not be realised whilst power and resources remain in the hands of the white minority in our society. The legitimacy of the democratic transition itself depends on the confidence that our people have on the ability of our government to effect meaningful social and economic transformation.
It is also critical that a working economy aimed at meeting the needs of all South Africans should be able to unleash the potential of all its citizens. An economy that leaves more than half of its people outside economic activity is doomed to fail.
Black Economic Empowerment is part of a process of broadening both economic ownership and active participation in the economy by all South Africans.
Government is not paying lip service to the issue of Black Economic Empowerment. We have implemented programmes over the past 5 years that have taken forward the goals of Black Economic Empowerment. Government continues to use its procurement of goods and services as a primary tool towards the realisation of socio-economic goals, including Black Economic Empowerment. In our restructuring and privatisation of State-Owned Enterprises (SOEs), Affirmative Action and the economic empowerment of historically disa dvantaged communities remain critical aspects of the restructuring and privatisation process.
To mention a few examples in the restructuring of SOEs: 10% in Telkom is being sold to BEE, 4.2% of ACSA shares were sold to BEE for R172,7 million, percentages for BEE in the SAA restructuring, the Management Contracts in Alexkor and Aventura, and the bid s in the SAFCOL restructuring have strong BEE components. These processes are as a result of deliberate government decisions to transform our society and empower disadvantaged communities. Government insists that they remain central objectives in the restr ucturing/privatisation process. As government, when we approach the issue of the future of BEE, we are not informed by the need to bring to en end such a key policy position of our ANC led government.
The role of government in Black Economic Empowerment could be defined in three ways. The first is to ensure that BEE is located within the broader context of the transformation of our economy and society as a whole. Without this critical location, Black Ec onomic Empowerment has the potential of degenerating into what others call "self-enrichment" and "rent-a-black". BEE, for it to succeed and enjoy the support of the majority of South Africans must be part of the broader movement for transforming the econom y, the workplace, skill development, employment creation and extending social services to our people. BEE should not be positioned in such a manner that it is in conflict with these objectives.
In a sense, government is in favour of a broader definition of and approach to Black Economic Empowerment. This means that the empowerment of a group of women in a rural area to run the rural economy, as one example should be seen as part of Black Economic Empowerment. A search for viable alternatives in economic ownership and economic activity, it could be argued should also be part of our understanding of Black Economic Empowerment. BEE is not only about the acquisition of shares in existing enterprises. It is therefore not about the replacement of white with black shareowners, without changing the operations of such entities, transforming the workplace, skill development and the way they do business. Fundamentally, Black Economic Empowerment should be par t of our efforts to forge a new path of economic development within the global economy.
It could therefore be argued that what threatens BEE in South Africa is its current narrow focus and the opportunism of some of its participants.
Government, as a facilitator and co-ordinator of economic activity therefore has the responsibility to monitor the direction of BEE in our society, and even suggests different approaches. Government will contribute its own experiences to this on-going asse ssment. BEE is a product of and in turn must contribute to the development and consolidation of the democratic breakthrough.
The second role of government is to use its key policy instrument, regulatory and financial tools in making sure this broad version of BEE is realised. Government is the central contributor in making Black Economic Empowerment a reality. Without the leadin g role of government through procurement, restructuring of SOEs and support for SMMEs, the agenda for BEE will not be realised. The state must harness its resources and capacity to ensure that economic participation is broadened.
Finally, government has the responsibility to create an environment for the success of initiatives undertaken as part of BEE. The post restructuring/privatisation environment has clearly shown the need to strengthen this aspect.
In conclusion, I have attempted to outline government opinions on the future of Black Economic Empowerment. I am aware of the debates within black business and the work of the Commission on the future of BEE. We must all assert that BEE is here to stay, be cause it is part of our accelerated programme of transformation and delivery. The challenge for us is to give it content and broaden its scope. Most importantly, BEE must be made the project of the overwhelming majority of South Africans for it to succeed.
I thank you !